Summary of Monitoring the Violations of the Sanctions and the Occupied Territories Regime in October and November, 2016

Summary of Monitoring the Violations of the Sanctions and the Occupied Territories Regime in October and November, 2016

12 December 2016

The joint BSNews and Maidan of Foreign Affairs ​monitoring group has summed up the results of the daily monitoring of violations of sanctions and the regime of the occupied territory in the Crimea in October-November 2016.

The joint BSNews and Maidan of Foreign Affairs monitoring group has summed up the results of the daily monitoring of violations of sanctions and the regime of the occupied territory in the Crimea in October-November 2016.

On November 30, one of the ships calling at the Crimean ports, SKY MOON, has been detained by the Ukrainian maritime border on the Danube. Another cargo ship PETR, has been arrested in Turkey for smuggling.

In October 2016, the vessels-offenders from the Crimean black list were included in the database of the «problem vessels» in terms of the crew employment with the wording "the vessel is under the risk of arrest for entry into the ports of Crimea." The database belongs to a well-known professional marine resource, the Seafarers Journal, and can be found there under the Problem Vessels.

Among the vessels-offenders, there are 20 ferries (passenger, road, rail), one of which operates between Sevastopol and Zonguldak, while the rest - between Taman and various Kerch ports; 12 of the vessels are tankers; the rest are dry cargo ships.

Four of the vesseld from the Crimea list have been also found in the Syrian sanctions OFAC list (USA).

For details, see table Ships That, in Violation of Ukrainian Legislation and International Sanctions, Called at the Ports of the Occupied Crimean peninsula in October-November, 2016 (Appendix).

Civil Aviation

The BSNews and Maidan of Foreign Affairs monitoring group carries out daily monitoring of the illegal flights of the Russian airlines to the occupied Crimea since the spring of 2014.

This publication is a brief summary of the results of the October-November, 2016 monitoring. The full version, as well as a full list of the airlines-violators of the sanctions, can be seen here.

The graph below shows the number of flights for two fall months compared to the same period in 2014-2015. There has been an obvious reduction in the number of flights in 2016 compared to 2014-2015. It is also worth noting that in November 2016 the number of flights was lower than in 2014, the first year of the occupation.

Number of Flights to the Occupied Crimea (2014-2016)

As of November 2016, the following airlines have flown to the occupied Crimea:

The main destination has not changed over the three years of the occupation – it's Moscow, while St. Petersburg takes second place. Among the destinations also are Yekaterinburg, Krasnodar, Kazan, Novosibirsk, Rostov, Tyumen, Ufa and Sochi. However, the frequency of these flights decreased to one per day in comparison with the 2014-2015 when there were at least two daily flights to each of these cities.

Russian airlines transport passengers to the occupied Crimea on the same aircrafts that they fly to the airports of the EU and other countries outside the European community who on March 27, 2014, voted in the UN General Assembly for recognizing the Russian annexation of Crimea illegal.

The monitoring group has collected the numbers of these boards in October-November 2016 and they can be seen in the table.

Natural Resources

Russia continued illegal extraction and exploration of hydrocarbons in the occupied Crimea and the Black Sea shelf.

As reported on November 18 by the speaker of the State Border Service of Ukraine, Oleg Slobodyan, for the duration of October and November, the Ukrainian border patrols observed geological prospecting work in the Sea of ​​Azov (the Bay of Arabat region). The work was carried out by the Dolphin diving vessel owned by the State Unitary Enterprise "Chernomorneftegaz" that had been formed by the Crimea occupation "authorities" on the basis of the Ukrainian GAO «Chernomorneftegaz» propery earlier seized by the Russian military.

In particular, the vessel conducted seabed research and coring.

According to Slobodyan, "the aim of these Russian activities is the study of the shelf for mining prospects."

On November 14, the occupation "Ministry of Fuel and Energy" of Crimea reported that in 2017 Chernomorneftegaz plans to step up the Black Sea shelf exploration.

What is considered is a prospective, but underexplored Gordievich structure located in the marine economic zone of Ukraine to the north-west from the west coast and south of the Crimean Golitsyn field.

Layout of hydrocarbon deposits on the shelf of the Black Sea and Crimea

Chernomorneftegaz counts on discovering gas reserves in the amount of 30 -100 billion m3 in the Gordievich structure. The company plans to start gas production there after 2020.

In the summer of 2016, Chernomorneftegaz announced a tender for the detailed design of a parametric well in the northwestern part of the Black Sea that was won by the Closed Joint-Stock Company "VolgogradNIPIneft".

In the case of 5.3% extraction per year, that field may actually increase gas production by two-fold.

Today, about 50% of the Chernomorneftegaz gas production in the Black Sea comes from the Odessa field. The seized company also operates the Storm, Golitsyn and Arkhangelsk field.

The Russia-occupied peninsula requires no less than 2 billion cubic meters of gas. As of November 9, 2016, according to the data of the Chairman of the Board of Chernomorneftegaz, Svetlana Nezhnova, the production amounted to about 1.49 billion. At the current pace of production, 1.6 billion cubic meters is projected to the end of the year, i.e., the deficit is about 400 million m3. The production at the Storm and Arkhangelsk fields has decreased - the pressure has fallen there due to the fields depletion.

In the 1st half of 2016, Chernomorneftegaz got more than 860 million m3 of gas. Previously, the company reported that the volume of gas production in 2016 would drop to 1.7 billion m3 "due to the depletion of existing gas fields."

Dredgers "Pechora", "Trophy" and "Irtysh" mine sand there around the clock, that is then delivered to Sevastopol for realization. About a mile from the place of production, the FSB Coast Boarder Guard ship "Emerald" that protects and covers the illegal extraction, remains constantly on duty.

Dredger "Tropha", photo www.marinetraffic.com

Dredgers "Tropha" and "Pechora" are among the Ukrainian ships seized by the Russian Federation in Crimea occupation.

In October, there have been new developments in the conflict between the residents and the occupiers over the quarry in the Crimean village of Trudolyubovka (Bakhchsarai area).

The development of the quarry on the area of ​​226 hectares will lead to the destruction of forests, mountains, flora and fauna and cause damage to the water balance of the valley and its microclimate. Residents of the Trudolyubovka village (Skalistovsky village council of the Bakhchisaray District) sent appeals to the "Republican Prosecutor's Office" and "government" of Crimea regarding the work carried out by LLC Bakhchisarai Quarry Manufacturing Operational Enterprise "Agropromenergo" on the border of their settlement.

Property

After completing the "nationalization" of the property seized in the peninsula, the Russian Federation has begun the process of its "privatization" that should allow, on the one hand, to help alleviate the problem of filling the Crimean budget and on the other – attempt to ensure the effective functioning of the captured enterprises in an environment where all the previously existing business ties have been severed. Often, it is also an attempt to bring the Crimean enterprises from under sanctions by changing the legal entity that manages the assets of the enterprise.

Despite the fact that at an extraordinary session on June 26, 2015, deputies of the "State Council of the Republic of Crimea" approved the "2015 Projected Property Privatization Plan of the State Assets of the Republic of Crimea," the mechanism of privatization has really been launched only in 2016. The "2016 Projected Property Privatization Plan of the State Assets of the Republic of Crimea" also includes all the objects scheduled for privatization in 2015.

The plan for 2016 included the privatization with the corporatization mechanisms of the "nationalized" health resorts "Dulber", "Ai-Petri" and "Mishor" on the southern coast of the Crimea; sale of stakes in the Evpatoria "Space" (9.24%) and the "Wave" (38%) resorts, the Simferopol LLC "Komplektstroy" (16.25%) and "Stroykomplekt" (49.2%), the LLC "Collective Enterprise "Agropromenergo" in the regional center of Soviet (8.05%), LLC "Tourist center "Ayan-Dere"in Simferopol (25%) and LLC "Dzhankoysky Rayselkommunhoz"(34%). 16 objects - non-residential buildings and complexes of unfinished projects in rural areas Razdolnenskiy, Day, Dzhankoy districts, cities and Kerch Saki – were planned to be actioned.

Health resort "Dulber," Koreiz

On October 31, the "Ministry of Property and Land Relations of the Republic of Crimea" has issued orders # 974 and 975 on the conditions of privatization of property of the "nationalized" health resorts "Ai-Petri" and "Miskhor".

A year earlier, in October 2015, the "Head of the Republic of Crimea" Sergei Aksenov said that the privatization of health resorts "Dulber", "Ai-Petri" and "Mishor" on the southern coast of Crimea is being prepared for sale under the implementation of a single investment project:

"There are a number of investment proposals, there are a number of customers who are willing to shell out a large sum and make the most of the recreation area. There are global proposals to fix Koreiz properly in order to make a model for the Republic of Crimea: to make roads, parks and one large enbankment."

The first auction of the privatized properties was scheduled for October 31. It aimed to sell the unfinished facility in Simferopol, but the auction was cancelled due to zero applications for participation.

On November 16, the "State Council of Crimea" approved the «2017 Projected Property Privatization Plan of the State Assets of the Republic of Crimea." The plan included the Research Institute of Aeroelastic Systems (Feodosia), the Feodosia Optical Factory and the Yevpatoria Aircraft Repair Plant - property the right to use which was previously transferred as a contribution to the authorized capital of the JSC "Crimean Wine and Cognac Plant" Bakhchisaray". 18 other sites, including those not sold in 2016, are also on the list.

In addition to privatization - a long and legally regulated process - occupiers actively use the mechanism of "property alienation".

It is through this mechanism that in February 2015, the health resort "Foros" earlier expropriated from the group "Privat", was sold.

In October, the "Ministry of Property" of the occupied Crimea prepared for sale ( "alienation of property"), the former health resorts of the "nationalized" Feodosia Research Institute of Aeroelastic Systems.

The Committee for Property and Land Relations of the «State Council of Crimea» has approved a draft resolution on approving the alienation of state property for further resale of the «Surf» resort(Koktebel), children's leisure base "Sunrise" (Koktebel) and the recreation center "Volna"(village of Marino, the Black Sea region) for consideration by the session of the occupant Parliament. On October 19, the decision on "Volna" and "Priboy" has been approved by the "Parliament".

According to the so-called "Minister of Property and Land Relations," Anna Anyuhina, these are the first items that are put up for public auction to fill the budget.

On October 1, the occupation media reported the plans by the Chechen Republic to purchase a health resort in Crimea for the rehabilitation of its population. Allegedly, such agreement between the "Head of the Republic of Crimea," Sergei Aksenov, and the leader of Chechnya, Ramzan Kadyrov, had been reached at the international investment forum "Sochi-2016".

In addition, the "Head of the Crimea" noted that:

"a number of the Chechen Republic projects already are already being realized in the territory of the peninsula and cooperation in the field of recreation is in the future."

On October 19, the "Parliament" of the occupied Crimea approved the sale of the next eight properties confiscated from the "Privat" group.

Specifically, we are talking about the premises formerly owned by the "Privatbank" and used as the bank's branches in Armyansk, Saki, Simferopol, Feodosia and Kirov. The market value of the objects ranges from 900 thousand to 11 million.

In 2014, the "Parliament" of Crimea has "nationalized" property of the"Privatbank" and the other companies of the "Privat" group owned by the Ukrainian businessman, Igor Kolomoisky. The list included more than 100 different objects.

Additionally, there is an ongoing redistribution of assets seized in the Crimea between the different RF state levels and departments.

On November 10, the "Sevastopol government" adopted a resolution on the transfer of property of the "Moscow Bank College of the Bank of Russia" (before the expropriation – the Sevastopol Institute of Banking of the Ukrainian Academy of Banking) in federal ownership, followed by reserving the property for the Nakhimov Black Sea Higher Naval School (CHVVMU).

The Sevastopol Institute of Banking of the Ukrainian Academy of Banking

"In August 2016 the Minister of Defense of the Russian Federation sent a request to the President of Russia to transform the property complex of the Moscow Bank College into the CHVVMU training base. In the address, the need was justified by the anticipated increase in the number of the naval school students. The Russian President agreed to this proposal – said the "Vice-Governor," Ilya Ponomarev. - Considering the consolidated position of the executive bodies and the Presidential resolution on the Minister of Defense's address, it is suggested to make a decision to transfer the complex of the Moscow Bank College into federal property with the subsequent reserve of the property for the CHVVMU ".

In November, the occupant government leased the property of the Feodosia Federal State Unitary Enterprise "Shipyard Morye" to the St. Petersburg Shipyard "Pella" until 2021.

Since 1950, "Pella" has been manufacturing maritime and river tugs, pilot boats and lifeboats. According to the RSBU, the revenues for 2015 decreased by 9.4%, while the net loss of the company last year amounted to 1.02 billion rubles. In 2014, according to the action plan approved by the Deputy Prime Minister, Dmitry Rogozin, "Pella" planned to purchase the Feodosia plant. But at the time, the plant's trade union opposed the purchase.

In May 2016, the RF Industry and Trade Minister, Denis Manturov, said that the "Shipyard Morye" would be integrated with "Pella". It was also reported that "Pella" was to reconstruct its Feodosia shipyard, beginning with dredging and renovation of premises. The first phase had to be completed in the fall of 2016.

No they claim that the reconstruction will be part of the second stage of the modernization and is planned for 2017. The total investment in the Feodosia factory "Pella" is projected to be close to 1 billion rubles. There is a possibility the factory will manufacture high-speed passenger ships for the Black Sea.

The chief editor of the the Russian "Arms Export" magazine, Andrey Frolov, commented that

the main advantage of the Feodosia shipyard is the emergence of a large private investor who is not under sanctions and can invest in the infrastructure. He said the fact that the shipyard is in the Crimea is a risk for the St. Petersburg company, but apparently, "Pella" was made the offer "impossible to resist".

In November, it was reported about the plans to corporatize the Sevastopol Black Sea Fleet Shipyard #13 (SRZ13 BSF) of the Russian Ministry of Defense (occupied Sevastopol) with the transfer to the United Shipbuilding Corporation (OSC).

According to the Federal Portal of the normative legal act drafts, the corresponding decree of the Russian President is underway.

In order to effectively use the federal budget, it is proposed:

"To consolidate production assets for ship repair by integrating Black Sea Fleet Shipyard #13 into the United Shipbuilding Corporation by transforming the federal state unitary enterprise into a joint-stock company, 100% of the shares of which are federal property, followed by the introduction of a 100% stake minus one share as the Russian Federation's contribution to the authorized capital of the Corporation in the payment procedure put in place by the joint-stock company for extra shares in connection with the increase of its authorized capital."

It is noted that the integration of the Black Sea Fleet Shipyard #13 into the United Shipbuilding Corporation will increase the investment appeal of the Corporation and accelerate the process of integration of the Crimea shipbuilding enterprises with the Russian enterprises, including in the interests of ensuring the combat readiness of the Black Sea Fleet forces and troops."

Visits of Foreign Delegations and Investments

One of the goals that the RF is trying to achieve in respect to the occupied Crimea is to demonstrate the ineffectiveness of the sanctions and mass violations thereof. The tool that is being actively used for that purpose is promotion of travel to Crimea of any foreign representatives, regardless of their real authority, and ensuring huge publicity for any group of foreign visitors who happened to come to the territory of the occupied peninsula.

The Crimean media reported the delegation consisting of 19 people, including "members of the Italian Parliament, representatives of the executive authorities and business tycoons, in particular, representatives of the wine, agricultural and construction business in Italy." However, the numerous publications on the visit mentioned predominantly members of the Parliament of the Italian region of Veneto (North Eastern Italy).

A BSNewsnote:

Veneto, Venice - one of the 20 regions of Italy with a population of about 5 million people. Venice is the administrative center and the largest city region.

Originally, a large program of the visit that included signing of the political agreement and discussion of "the possibility of trade deals in circumvention of the anti-Russian sanctions" was announced:

"What has been prepared for signing is not only a political agreement, a memorandum between the parliaments, but also contracts between the Crimean and Italian winemakers that should lead to breaking through the blockade, so that Crimean products could be easily sold in Europe and that the Italian investors could easily develop in Crimea", - said Co-Chair of the Board of the Yalta Economic Forum (YAMEF), Andrei Nazarov.

He noted that the investment projects by the Italian entrepreneurs have were being realized: "Quietly, some of the investment projects by the Italian entrepreneurs are already being carried out in Crimea. The plan is not only to do that officially, but also on a larger scale."

During the visit, on October 14-15, delеру egation met with the Сhairman of the "State Council of the Republic of Crimea,” Konstantinov, acting "Governor of Sevastopol", Dmitry Ovsyannikov and "Vice Governor", Ilya Ponomarev, a visited the "Massandra" winery and, according to the organizers, had talks with the business representatives.

The so-called "political agreement" turned out to be merely a joint statement on the development of interregional cooperation, signed on October 14 in Simferopol by Chairman of the "State Council of the Republic of Crimea," Vladimir Konstantinov, and the President of the Regional Parliament of Veneto, Robert Chambetti.

However, the text emphasized that the statement was not an international agreement and intended only to express the good will of the parties and their interest in implementing such intentions.

In particular, the parties have stated that they would contribute to the development of cultural and tourist projects, including the twinning of cities. In addition, the Crimea and the North of Italy intend to use all the opportunities for the mutually beneficial cooperation of industrial and trade companies, direct and mutual investment and the implementation of joint research projects and studies.

"The main element in the development of bilateral cooperation will be regular exchange of delegations, participation in exhibitions, trade fairs and congresses in Crimea and Veneto," - said the joint statement.

The document also expressed the intention of the parties to negotiate and sign an agreement on cooperation in trade, economic, scientific-technical and mutual humanitarian aid.

But actually, the previously announced agreement on the twin-city partnership of Yalta and Verona had not been signed during the visit, reportedly, "due to the lack of time."

The results of the negotiations on business cooperation have been voiced in the future tense as it often happens in the occupied Crimea.

«The talks that took place yesterday and today (October 14-15) continue, but have already led to the fact that a number of contracts between Russian and Italian businessmen will be signed" – emphasized Nazarov and explained that there had been talks about the construction of the hotel in Simferopol and the acquisition of one of the famous Russian magazines on architecture, construction and design that would promote Italian manufacturers on the Russian market. There have also been proposals for the joint production of wine and construction of the turkey meat production plant.

Andrei Nazarov said that the issue of the of the turkey meat production specifically in Crimea is still being debated, but that there is "a strong desire of the Italian colleagues" to build such enterprise somewhere in Russia.»

It has been also reported that Italian entrepreneurs and top managers of Italian companies will participate in the third international economic forum in Yalta scheduled for April 2017, "in order to get acquainted in detail with the investment proposals and conditions for the implementation of business projects in Crimea".

On October 5, the top management of the Chinese company Xishui Hubei Kemei Machinery Co. Ltd that manufactures ceramic foam, arrived to the occupied Crimea, where it inspected the investment platforms and met with the representatives of the «Ministry of Natural Resources» "to get information on the explored deposits of clay - the basis of the ceramic foam production."

The press service of the so-called "Development Corporation of the Republic of Crimea" wrote that the Chinese company was planning to build its plant in the occupied Crimea.

"Potential investors are most interested in the "Bakhchisarai "and" Feodosia" industrial parks, as well as in the grounds and property complex of the Dzhankoy Engineering Plant" – stated the press-service.

According to the corporation, the management does not rule out "the possibility of buying an existing construction materials plant with the goal of modernizing it and using as the basis for its ceramic foam production."

As stated by the occupation government of Sevastopol, another group of Chinese visitors came in October as part of a joint China-Sakhalin businessmen group "to study the possibility of cultivation of bivalve mollusks - scallops, oysters and mussels - in the Black Sea conditions"

According to the Sevastopol "government", Russian and Chinese investors intend to "create in the Sevastopol region a company that would raise shrimp and shellfish using a Chinese technology."

In late October, the media reported on some unnamed Greek shipowners who suggested the use of their ships in Crimea.

The "Deputy Prime Minister" of the Crimean "government" and "the permanent representative of the Republic of Crimea," under the Russian President, Georgy Muradov, announced that Greek shipping companies had been working on the issue of cooperation with the occupied Crimea.

He stressed though that "the negotiations with the Greek delegation were held behind closed doors and without the press."

In late October, it was reported that the "Days of German Culture" held in the occupied Crimea between October 22-29, had been attended by 20 guests from Germany and Norway.

According to the Chairman of the National-Cultural Autonomy of Germans in Crimea, George Hempel, the delegation included MPs, businessmen and representatives of public associations, as well as ethnic Germans who conduct "quite serious business" in Norway.

In early November, the network filled with reports from the information resources of the Crimea occupation authorities on the November 10, 2016 visit to the peninsula of the delegation of German investors, in particular, the company GEA Westfalia Separator Group GmbH, represented by Heinrich Weweler and Innovations Holding Technolog represented by Voigt Hans Jurgen.

A BSNews note:

Company GEA Westfalia Separator Group GmbH, founded in Germany in 1893, is one of the largest and oldest in the world manufacturers of separator equipment and decanters for the processing of milk, fats, petroleum, energy, offshore installations, sewage treatment, as well as chemical and pharmaceutical industries. It has a representative office in Kyiv, supplying their equipment all over Ukraine, has sponsored the IV International Conference «Black Sea Oil Trade-2016" held in Kyiv on September 7, 2016, and also organized the "UkrAgroConsult".

After the visit of Mr. Heinrich Weweler to the occupied Crimea, Deputy Minister of Justice of Ukraine, Sergey Petukhov, sent an official letter to the main office of the company with the request to explain the violation of anti-Russian sanctions and also made a series of phone calls to the German Embassy in Ukraine and the Embassy of Ukraine in Germany to clarify the circumstances of the illegal visit of the German citizens to the occupied peninsula.

As Mr. Petukhov wrote on his page on Facebook, in response, GEA Westfalia Separator Group GmbH had sent assurances that under no circumstances did the company intend to violate the EU sanctions against Russia due the annexation of the Crimea, and that the employee referred to above, was the sales manager and had no authority to make investment decisions or represent the company before officials, the media or the public. As reported in the letter, the management of the GEA Westfalia Separator Group GmbH, was unaware of Mr. Weweler's vistit.

Photo from the FB page of the Deputy Minister of Justice, Sergei Petukhov.

Deputy Minister of Justice of Ukraine followed up by sending a letter to the GPU and SBU to check the legality of crossing the state border of Ukraine in the temporarily occupied Crimea by the above-mentioned German citizen and bring him to the appropriate administrative or criminal liability.

Earlier, in 2011, German sales manager, Heinrich Weweler, had already visited Kyiv for talks with the "Kyivvodocanal," LTD, but at the time, he did hold the position of the company's executive director.

The German edition of DW also mentions another representative of the German business, Bernhard Miller, of Alois Miller Erdbau und Abbruch, who at the end of September, 2016, sought investment opportunities in the occupied Crimea.

November 23-25, ​​Crimea was visited by a Turkish delegation and the visit was very widely covered by the occupant media.

The reported goal was the negotiations on economic cooperation and the restoration of the direct transportation connection between Turkey and the occupied Crimea.

The Turkish delegation included the Head of the Turkish Association of Eurasian Governments, Hasan Cengiz, the Vice-Mayor of Ankara, Ahmet Tunç, a deputy from the IDB, Mahmut Malley, as well as other Turkish politicians and "representetived of the business circles."

The head of the Turkish delegation Hasan Cengiz (center) at the airport of Simferopol. Photo by RIA Novosti.

"Shortly, the second flight will bring to the capital of Crimea two advisers to the President of Turkey, Recep Tayyip Erdogan, including his cousin Mehmet Mutlu, and a number of deputies of the Turkish Grand National Assembly from the ruling IDB party."

However, there has been no further information on the arrival of other members of the delegation.

On November 25, the site of the Turkey's Foreign Ministry published a statement by the Foreign Ministry spokesman, Hüseyin Myuftyuoglu, that the visit of the Turkish delegation to the Crimea that the Ministry had learned about from the news, was not an official one and that Turkey's policy had in no way changed in the matters of respect for the sovereignty and recognition of the territorial integrity of Ukraine, including Crimea.

Appendix.

Sea Vessels that in Violation of the Ukrainian Legislation and International Sanctions, Called at the Ports of the Occupied Crimean peninsula in October-November 2016

Note on the database update:

dates of the vessels-offenders calls at the Crimean ports in 2016 are highlighted in blue font with the purple background;

new vessels-offenders that have first made it to the database in October and November 2016 have a highlighted line background;

visits of ships in Crimea in October and November 2016 are highlighted in yellow.

The investigation is conducted within the project The International Sanctions Over the Annexation of Crimea: Efficiency and Effect, Adherence and Circumvention Techniques, made possible by the support of the Media Development Fund of the US Embassy in Ukraine. The opinions of the authors do not necessarily coincide with the official position of the US government.

***

The monitoring of the violations of international sanctions against Russia and the legal regime of the temporarily occupied territory of Crimea is supported by the European program initiative of the "Renaissance" International Fund. The views of the authors do not necessarily reflect the position of the position of the "Renaissance" International Fund.